October 5, 2011 12:01 am

Online advertising retakes top slot

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Advertising on the internet increased its share of the overall UK market to a record 27 per cent in the first half of 2011, retaking the position as the dominant platform for advertisers from the television industry.

Display advertising was the best performer within the sector, with industry experts saying that buyers in the fast-moving consumer goods (FMCG) market had discovered that video advertising on the internet, particularly through social media websites, could be a cost-effective way of reaching consumers.

Online video advertising spending increased by 100 per cent compared with a year earlier, the Internet Advertising Bureau said.

With a market up just 1.4 per cent year on year, to £8.27bn between January and June, spending on the internet reached £2.26bn, an increase of 13.5 per cent on the same period in 2010.

Television spending was up 3.6 per cent to £2.16bn or 26.1 per cent of the total market, while newspaper and magazine display advertising fell by 5 per cent to £1.37bn or 16.6 per cent. Classified advertising in the press accounted for 7.6 per cent of the market, down 14.1 per cent at £627.6m of expenditure.

Of the total for the internet, search advertising remained the largest component, with 58 per cent of all online spending, the same level as last year. However, display advertising saw significant growth, increasing by 18.5 per cent in the period.

The IAB, which produces the survey with PwC, the professional services firm, and Warc, the advertising research body, said the figures reflected a period in which the marketing industry had discovered the power of online video.

Guy Phillipson, IAB chief executive, said: “FMCG advertisers were relatively late to the party, but now firmly established as the second-highest spending category [after the financial services sector], they clearly have all the proof they need to invest in line with the medium’s share, and enjoy healthy returns from cross-media campaigns.”

There was a 20 per cent growth in lead generation, whereby advertisers pay according to actual sales leads derived from advertising rather than the less attractive “click-through” measurement. But while analysts believe this will become increasingly important, it remained small with just £26m of the total advertising spend on the internet.

Television was overtaken by the internet in terms of having the greatest share of advertising spending in 2009 and won back its position at the top of advertisers’ agenda last year, but has fallen back again.

Both media appear to have won market share at the expense of the press and magazines.

Within internet usage data, the IAB pointed out that people were now spending 25 per cent of their time online using social media websites such as Facebook and Twitter. UK web surfers look at 2.3bn videos in an average month, the data revealed, averaging 4.1 hours a month in total. The measurement for the total number of UK internet users grew from 38.4m at June 30 last year to 39.5m on the same date in 2011.

The overall figures for advertising expenditure in the UK cover the following categories: press display, press classified, TV, radio, outdoor (poster/billboard), cinema, internet, direct mail and directories.

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